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At-will Employment – Why It Is the Norm in the U.S.

Logo for Quora, where Dana Shultz answered a question about at-will employmentAt-will employment permits either an employer or an employee to terminate their relationship at any time for almost any reason. This post explains why at-will employment is the norm in the U.S.

I am basing this post on a Quora question that I answered recently. Please see Why are labour laws governing companies almost non existent in North America, compared to Europe? 

At-will Employment Does Not Mean No Labor Laws

The statement that labor laws governing companies are almost nonexistent in North America is incorrect.

However, at-will employment is the norm in the U.S. (though it is subject to numerous exceptions). And at-will employment is fundamentally different from the approach to labor relations that prevails in much of Europe.

As Wikipedia describes, at-will employment took hold state-by-state in the late 19th and early 20th centuries. Eventually,  the U.S. Supreme Court endorsed it.

At-will Employment Philosophical Underpinnings

A law review article, Employment At Will in the United States: The Divine Right of Employers, explains the philosophical underpinnings of at-will employment. That article then discusses the underpinnings of labor law in many other developed countries (emphasis added, footnotes deleted):

The Tennessee Supreme Court articulated the employment at will doctrine in 1884, thus endowing employers with divine rights over their employees. This doctrine has been, and still is, a basic premise undergirding American labor law. The United States, unlike almost every other industrialized country and many developing countries, has neither adopted through the common law or by statute a general protection against unfair dismissal or discharge without just cause, nor even any period of notice.

This distinctive aspect of American labor law is more than a minor oddity concerning protection from dismissal. Its tentacles reach into seemingly remote areas of labor law, for at its roots is a fundamental legal assumption regarding the relation between an employer and its employees. The assumption is that the employee is only a supplier of labor who has no legal interest or stake in the enterprise other than the right to be paid for labor performed. The employer, as owner of the enterprise, is legally endowed with the sole right to determine all matters concerning the operation of the enterprise. This includes the work performed and the continued employment of its employees. The law, by giving total dominance to the employer, endows the employer with the divine right to rule the working lives of its subject employees.

It is this assumption which gives American labor law much of its distinctive character. In other countries, employees are viewed as members of the business enterprise. In Germany, for example, the employee-elected works council has, in addition to representation on the supervisory board, codetermination rights over decisions such as work schedules, leaves, safety and health measures and guidelines for hiring, transfer and dismissal. If the employer and the works council cannot agree on these matters, the issues are submitted to binding arbitration. In Sweden, the union must be consulted on “any matter relating to the relationship” between the employer and the employees. This includes such matters as a decision to introduce new machinery, sell the company or hire a new managing director. In Japan, the union is consulted on nearly all matters of employee interest and employees are commonly referred to as “members of the family. The general assumption underlying the employer-employee relationship in other countries is that employees are more than mere suppliers of labor. Rather, they are members or partners in the enterprise and are thereby entitled to a voice in the decisions of the enterprise which affect them. This variance in assumptions results in significantly different legal rules and labor relations systems.

Individualism vs. Collectivism

I believe that these different approaches reflect the U.S. being a nation that values and emphasizes individualism. In contrast, many other nations value and emphasize collectivism. (Please see, for example: An Analysis of American Individualism Culture; Country Comparison – Hofstede Insights; The American-Western European Values Gap.)

So, why is the U.S. relatively individualistic? I suspect this may be a result of the U.S. never having a monarch, never having nobility, never having to force countless city-states to combine themselves into a nation.

Instead, the colonies started by cutting themselves loose from England and aggregating voluntarily. One of their smartest moves was to include the Tenth Amendment to the U.S. Constitution. That Amendment guarantees that powers that are not expressly granted to the federal government belong to the states or to the people, themselves.

As a result, people knew what they would gain by joining the U.S. And they knew what they would not lose.

At the personal level, there was plenty of physical space for individuals and families to go wherever they wanted and to do whatever they wanted. If they had enough energy, concentration and perseverance, there was virtually no limit to what they could accomplish.

Freedom vs. Laws and Regulations

Ultimately, that is what lies behind at-will employment in the U.S. Most Americans think the risk-reward ratio is fine, and they prefer greater freedom to more laws and regulations.

For additional information, please see all posts about at-will employment.

Dana H. Shultz, Attorney at Law +1 510-547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.